The Initial steps towards property purchase are the scrutiny of title deeds of the property, and this is the first and foremost exercise the purchaser’s advocate has to undertake before entering into an agreement with the seller.
A clean and marketable title, free from all doubts and encumbrances vested with physical possession, is very important. The ownership of the titleholder can be traced from the title deeds and revenue records.
It is the duty and responsibility of the purchaser’s advocate to safeguard the interest of his client. The advocate shall thoroughly scrutinize the marketable title of the property and genuineness of the documents. The advocate should also amount of risk involved in the transaction and guide them on the mode of payment to be adopted.
Origin of the Property:
The origin of the property is very important to trace the title of the property. It is otherwise called “Root of Title”. It is the safest way to determine the origin of the property and trace its marketable title. Documents covering a minimum period of 43 years of Adverse Possession against individuals or Conflicting Claims (other than mortgage) against individuals, documents covering a minimum period of 30 years must be checked. If a person is enjoying the property for more than 30 years, he will get title by adverse interest against the government as per the Limitation Act. Also as per Section 90 of the Indian Evidence Act 1872, a document executed 30 years fore is presumed to be valid.
After ascertaining the origin of the property, it should be followed up by methodical examination of events and further transaction, if any, in an uninterrupted and sequential manner, involving the previous owners and the present owner of the property. Here, the purchaser’s advocate has to very carefully look into all aspects from various legal angles as to how the property was transferred from the previous owners to the present owner. Such a transfer may be by possession, inheritance, settlement, will, sale, mortgage, release, gift etc., involving such intermediate parties. For supporting such a transaction, the advocate has to carefully examine the title deeds and other supporting documents like revenue documents and other records. Also verification of identities of the names of parties and their family connection, wherever they are relevant, and proceeding if any, involving the parties before any Court of Law, other legal forums and authorities including revenue authorities, must be done.
The nature of various statutory clearances obtained from the relevant authorities like revenue, land reforms, income tax, etc., equipped for completing the transaction must be informed to the parties. In case of purchase of agricultural land, various clearances must be obtained before executing the Deed of Conveyance.
The “Present status” of the property is the most important point to be examined. The advocate has to fined out who is the present owner, origin of the property, what title deeds and supporting documents he is holding, is it his ancestral property or self acquired property and who are his legal heirs, if the legalheirs are majors in age, the vendor must ensure their presence while executing the Deed of Conveyance. If they are minors in age, the vendor has to get the permission from the court before executing the Deed of Conveyance. In some cases the vendor may conceal the fact of legal heirs. To find out the truth, the advocate must ask the vendor to produce either the succession certificate or the family genealogical tree issued by the revenue authority. If necessary he must see the family ration card for further clarification.
The advocate must find out in whose name the Khata stands, whether the khathedar possesses up-to-date tax paid receipt in his name and up-to-date Encumbrance Certificate to establish his right, title and interest in the property. The advocate has to check the Encumbrance Certificate covering a relevant period, generally above 12 years upto 43 years from which it would be known what kind of charge has been created on the property and whether such an encumbrance is subsisting or not. Municipal and other revenue authorities too maintain records as to who is in possession of the property, what is the amount of tax payable on the property and upto what period tax has been paid. All this can be learnt from these records. “Present Status” is an important factor to establish property’s present ownership.
Genuineness of documents:
After thoroughly scrutinizing the documents, the purchaser or his advocate has to check up all documents for legality with the concerned departments just to ensure that the documents are genuine; that they originated from the departments and that they are not fake ones. In addition the advocate has to find out from the department whether there is any attestation, notification or proceedings against the present owner. In case of buildings it must be ensured that it has not been served with a demolition notice.
Identity of the property:
The identity of the property must be checked on the spot. Measurements mentioned in the documents must tally with actual physical measurement of the land available on the property. It must also be ensured that there is no encroachment on the property. In case of encroachment, the measurement of the available land must be recorded and this must be mentioned in the Deed of Conveyance. The boundaries in the schedule surrounding the property must be checked physically. Also, the purchaser may make enquiries tactfully with the adjacent property owners about the ownership of the property he is proposing to buy.
Though paper notification is optional, it is always advisable to notify in a leading local newspaper about the buyer’s intention to purchase the property. This is done to safeguard the interest of the purchaser. Even after examining the various documents, the Advocate may not be able to find out whether the property is truly free from any claim or not. A paper notification will beget response from a genuine claimant. Therefore, paper notification is the best way to avoid legal problems for the purchaser at a later date.
Physical Possession : In case of a vacant site, the purchaser may, with the permission of the vendor fence the property with barbed wire or he may construct a compound wall and put a signboard, if necessary, to intimate the ownership of the property.
Verification of title is very important. It is not merely tracing the title on the record but also examination of the genuineness of the records, identification of the property, notification in a newspaper and physical possession of the title of the property.
Even after entering into an “Agreement to Sell”, the purchaser continues to make enquiries about the title. A doubtful title cannot be forced upon the purchaser. Purchaser is not bound to complete the sale if there are defects in the property, material or latent, which are not discernible in ordinary course. A mere suspicion of fraud that cannot be made out will not make the title doubtful and the purchaser cannot reject the title.